Democrats debate amongst themselves: Should we curb natural gas exports?

posted at 5:07 pm on January 5, 2012 by Tina Korbe

It was only just a matter of time. When the U.S. became a net exporter of petroleum products, I warned that politicians might just begin to talk about restricting gasoline exports. As it turns out, I was half-right and half-wrong. Sure enough, at least one politician has begun to talk about restricting exports — but of natural gas, not oil-based fuels.

Right now, we export very little natural gas — but the abundant fuel currently draws higher prices in foreign markets than it does in the U.S., which makes exporting attractive to producers. Under a 1938 law, the Department of Energy has authority to permit or restrict liquefied natural gas (LNG) exports. Surprisingly, the DOE recently approved an application from a Cheniere Energy subsidiary called Sabine Pass Liquefaction to export LNG — and might approve up to seven additional export applications.

Democratic Rep. Ed Markey is not happy about that. Yesterday, he sent a letter to Energy Secretary Steven Chu to effectively ask him: What the heck do you think you’re doing? Markey is concerned that increased natural gas exports could lead to higher natural gas prices in the U.S. and that those prices, in turn, could make natural gas less attractive as a “bridge fuel” between “dirty” energy sources like coal and “clean” sources like wind and solar.

He’s right: Increased exports probably would in all likelihood lead to higher natural gas prices in the U.S. But those higher prices would actually just serve to make more attractive the alternative energy sources he’s so fond of subsidizing.

Markey’s argument to restrict natgas exports is weak for two other reasons, too. In the first place, Markey and other environmentalists love to rail against China for its own export restrictions on raw materials and rare earth elements used in green technology products. To now advocate restrictions himself is hypocritical, to say the least. In the second place, natural gas companies have taken enormous risks to produce more natural gas. They developed the new technologies that enabled them to drill in shale formations, they’ve drilled the wells and they’ve produced the fuel. All that cost them something. They could have left us to become a natural gas importer, which we were on track to be in the 1990s. Instead, they set us up to be the Saudi Arabia of natural gas. Limit their ability to earn a profit by restricting exports — and what will happen? They’ll have no incentive to continue to develop the fuel. All those natgas-based jobs in Pennsylvania and elsewhere? Gone.

Luckily, at this point, not allowing additional exports is just a debate — but it’s still chilling that Democrats consider discussion of this idea needful. The rest of us can see clearly that intentionally limiting natural gas exports is counterintuitive and contrary to the free market principles that ensure the most efficient allocation of energy resources.


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Democrats: “Quick! Let’s destroy the natural gas industry’s viability for no reason whatsoever!”

The GOP should point out that exports mean Americans become wealthier, that we create jobs here, and that we help to offset our trade deficit.

Stoic Patriot on January 5, 2012 at 5:12 PM

Too bad the chemical industry is so hated. It would be much more profitable to convert the gas into fertilizer and other high value chemicals for export. More jobs, too.

deadman on January 5, 2012 at 5:13 PM

Markey is concerned that increased natural gas exports could lead to higher natural gas prices in the U.S.

Hey Malarkey , remember Hussein promising to make energy prices necessarily skyrocket ?

burrata on January 5, 2012 at 5:14 PM

Markey and other environmentalists

He wants to prohibit exports to reduce production so fracking won’t be needed.

BacaDog on January 5, 2012 at 5:14 PM

It isn’t the exports that lead to high prices, it is the threat to imports. So what do you want? Control your own destiny or ride the whirlwind?

Limerick on January 5, 2012 at 5:16 PM

Come to think of it, if oil gets up to $150/bbl again, it would be very worthwhile to convert the natgas to methanol thence to gasoline (Very well understood technology and commercial in New Zealand and soon China).

Oh, darn. I forgot that would create PROFITS for the 1% (and Goldman-Sachs) and endanger our CHILDREN with TOXINS. Best to just bitch about unemployment and fuel prices because there is nothing else to be done while waiting for our alternative energy renaissance to take hold.

deadman on January 5, 2012 at 5:19 PM

Wait, wouldn’t he rather tax it into oblivion instead?

Ukiah on January 5, 2012 at 5:22 PM

So you think Mr. Chu has your best interests at heart ? prolly not.

FlaMurph on January 5, 2012 at 5:27 PM

Because in my Poli Sci class, I learned nothing possibly good could become of exporting actual products, instead of paper dollars.

Right?

MNHawk on January 5, 2012 at 5:29 PM

Can we safely assume already that O’Zero is working for his ChiCom employers? There hasn’t been a single act of his that hadn’t directly benefited China.

Archivarix on January 5, 2012 at 5:32 PM

What?! More prosperity?! Those infernal capitalists keep popping up everywhere! It’s like whack-a-mole!

John the Libertarian on January 5, 2012 at 5:40 PM

Nancy Pelosi claims natural gas is not a fossil fuel. We have a dysfunctional energy policy and department. No thinkers. We have 600,000 miles of pipeline and the next 1,400 mile pipeline is treated like it will trigger Armageddon.

seven on January 5, 2012 at 5:42 PM

They are not going to stand by and let the most plentiful and cheapest fuel we have help the American people.They will have to muddle it up,for our own good.

docflash on January 5, 2012 at 5:43 PM

Malarkey from Markey.

Unexpectedly.

hillbillyjim on January 5, 2012 at 5:44 PM

Democratic Rep. Ed Markey is not happy about that. Yesterday, he sent a letter to Energy Secretary Steven Chu to effectively ask him: What the heck do you think you’re doing? Markey is concerned that increased natural gas exports could lead to higher natural gas prices in the U.S.

The Leadership: When will these recalcitrants figure out that supply and demand economics are irrelevant in a command economy? Ship him out for some re-education … yeah, send him to Berkeley.

OhEssYouCowboys on January 5, 2012 at 5:44 PM

Democrat politicians want to remain the biggest source of gas, although what they produce is less useful.

NoDonkey on January 5, 2012 at 5:50 PM

Democrats: “Quick! Let’s destroy the natural gas industry’s viability for no reason whatsoever!”

Stoic Patriot on January 5, 2012 at 5:12 PM

oh theres a reason dude….theres a reason.

t8stlikchkn on January 5, 2012 at 5:58 PM

Democrats debate amongst themselves: Should we curb natural gas exports?

Because Washington DC is so close to our eastern border, wouldn’t a curb on “natural gas” require the Senate to be shut down????

landlines on January 5, 2012 at 6:03 PM

I wonder if in addition to banning exports, the Democrats will go into full attack mode and lend China or some other country a few billion to drill, develop and export foreign sources of natural gas to drive the price up and deprive America of jobs and profit. It worked for oil, why not natural gas?

http://hotair.com/archives/2011/03/28/wapo-why-is-obama-pursuing-a-drill-brazil-drill-strategy/

MessesWithTexas on January 5, 2012 at 6:10 PM

Democrats
DOE
Debate
D U H ?

KOOLAID2 on January 5, 2012 at 6:12 PM

This happened a few years ago, about 2007. The government encouraged increased use of natural gas for power generation, but provided no incentives for increased production of gas. Consumption went up, supply lagged, and gas went to $14 per MCF (thousand cubic feet). That had widespread repercussions, from people going broke heating their homes, to farmers not being able to afford to properly dry corn, and chemicals derived from nat gas went through the roof.

Now, if prices stay low, supply will drop, and in the meantime all the coal-fired plants shut down by the EPA will be replaced with gas. Which will lead to another spike in gas prices and all the bad things that happen with that (well, not for me, I work in the natural gas industry).

iurockhead on January 5, 2012 at 6:45 PM

He’s right: Increased exports probably would in all likelihood lead to higher natural gas prices in the U.S.

Wrong, and I am astonished to find that type of thinking here.

Increased exports will lead to increased production, which will lead to lower unit costs, which will lead to lower prices.

ss396 on January 5, 2012 at 7:49 PM

I wonder when Congress is going to tell me how I can sell my cows.
And whom my husband can drive his semi truck for.
And whom I can sell my photographic services to.
Next they’ll be telling me where I can work.

Badger40 on January 5, 2012 at 7:56 PM

Yes, we should restrict exports of energy. Energy equals our economy. We should be importing energy while at the same time producing enough energy to ensure we do not need to import. Drive the prices down globally by producing all our own energy, keep our own energy, and use other nations energy. Everyone says it is a limited non renewable resource, and it belongs to all Americans. I am not some freak conservationist, I say drill here, drill now, lower prices. On the other hand, part of what we turn over to our children is going to be the natural resources of this nation, and we should not be exploiting those resources to provide for other country’s people.

astonerii on January 5, 2012 at 8:10 PM

This is just his way of extorting i mean soliciting a bribe ouhh i mean campaign contribution.

dunce on January 6, 2012 at 12:04 AM

@ss396 Thanks for that clarification. I should have specified that exports might lead to a short-term increase in prices if demand briefly outpaced supply. But you’re right: Producers would adjust to meet demand.

Tina Korbe on January 6, 2012 at 12:46 AM

@ astonerii

Yours is the first sensible comment I’ve seen on this issue.

avgjo on January 6, 2012 at 4:17 AM

I must say too that algae oil is a viable, practical, almost unlimited source of oil, if it gains popularity. Why it doesn’t get more attention is beyond me.

avgjo on January 6, 2012 at 5:29 AM

Tina Korbe on January 6, 2012 at 12:46 AM

It would actually drop, as we’re printing fewer dollars.

MNHawk on January 6, 2012 at 6:13 AM